Seattle, Sacramento face off in NYC: The basics of their NBA pitches

Seattle and Sacramento will go head-to-head Wednesday in New York when groups from both cities make their pitch to the NBA for securing the same pro-basketball team.

Here are the basics:

The targeted team: Both Seattle and Sacramento are vying for the NBA’s Sacramento Kings, who as of Tuesday have a 27-47 record and are in fourth place in the Pacific Division.

Who’s listening to the presentations: Members of the NBA’s finance and relocation committees will hear pitches from the Seattle and Sacramento groups Wednesday at a NY hotel. There are two questions at issue: Whether to approve a sale of the Kings to a Seattle group, and whether to approve the team’s relocation to Seattle.

When there’ll be a decision: The NBA’s full Board of Governors, made up the league’s majority team owners, is expected to vote during their April 18 meeting on whether to approve the sale and relocation.

Who is presenting from Seattle: Mayor Mike McGinn and King County Executive Dow Constantine will join lead investor Chris Hansen, Microsoft CEO Steve Ballmer and two members of the Nordstrom family for their presentation to the NBA committees.

Who is presenting from Sacramento: Mayor Kevin Johnson will be joined by deep-pocketed investors Vivek Ranadive, founder of the Silicon Valley tech firm TIBCO; Mark Mastrov, founder of 24-Hour Fitness; Ron Burkle, a billionaire grocery-store magnate; and others for Sacramento’s presentation.

Seattle’s acquisition deal: Hansen in January reached a deal with the majority owners of the Kings, the Maloof family, to buy their 65 percent chunk of the franchise for $341 million. (Not part of Wednesday’s presentation is the additional 7 percent Hansen may buy via a California bankruptcy case.) As part of his binding deal with the Maloofs, Hansen paid them a nonrefundable $30 million fee.

Seattle’s arena deal: The Seattle City Council and Metropolitan King County Council, after months of examination and negotiation, in October approved a public-private partnership plan to build a new arena in Seattle. The city and county (mostly the city) would put up $200 million toward the $490 million arena, with Hansen’s group paying the rest plus any cost overruns. The public money would come from selling bonds backed by future revenue from the arena itself, through team rent and existing ticket and business taxes. Hansen has also already bought about $50 million worth of real estate south of Safeco Field in Sodo, where he wants the arena to be built, and has pledged to pay for $20 million in upgrades to KeyArena.

Seattle’s relocation application: Hansen’s group applied in February for the Kings’ relocation to Seattle for the 2013-14 season. The team would be renamed the SuperSonics and would play in KeyArena for two to three years before the planned arena is finished.

Sacramento’s arena deal: Over the past two months, Johnson has organized an impressive effort to finance a new arena in Sacramento. The City Council last week approved a public-private partnership plan in which the city would contribute $258 million toward constructing a new arena downtown, with investors picking up the remaining $190 million and any cost overruns. The public money would be paid off by parking taxes and, if those don’t add up, other sources such as hotel taxes.

Sacramento’s new ownership plan: Ranadive, Mastrov, Burkle and Qualcomm CEO Paul Jacobs have joined forces to put together a counteroffer if the NBA rejects Hansen’s acquisition. The Maloofs could entertain the Sacramento offer if Hansen’s purchase is denied.

The NBA’s acquisition vote: Approval requires a three-fourths majority, so just eight members voting “no” on April 18 would block Hansen’s purchase of the Kings.

The NBA’s relocation vote: If the sale is approved, the Board of Governors will vote on the Kings’ relocation to Seattle. Approval requires only a simple majority, or more than 50 percent of the vote.

Seattle’s situation: It’s a city with a bigger TV market and a rich history with the NBA. The original Sonics left after 41 years in Seattle in 2008, when new owner Clay Bennett moved them to Oklahoma City and renamed them the Thunder. Seattle leaders had rebuffed calls for an expensive renovation of KeyArena, sparking the NBA’s approval to relocate the team.

Sacramento’s situation: The Kings have been in Sacramento since 1985, when the team relocated from Kansas City, Mo. The team nearly moved to Anaheim, Calif., last year in 2011 but the NBA blocked relocation when Mayor Johnson put together a plan to finance a new arena. That arena plan fell through when the Maloofs rejected it, and the new arena deal calls for construction in a different part of town.

The NBA’s dilemma: The league has never rejected a binding purchase agreement between existing team owners and prospective new owners. The league also never has voted to relocate a team from a city that has a plan for a new arena and ownership. The Seattle group has done everything by the book, and has even respected the NBA’s requirement to keep quiet about the acquisition deal this year. The NBA’s owners, if they reject the Kings’ sale to Hansen, would also be turning their back on a deal that would substantially increase the value of their own franchises.

No easy way out: NBA Commissioner David Stern has repeatedly said there is no room for league expansion right now, so it seems out of the question for Seattle or Sacramento to be awarded an expansion team as consolation.

“It will be a tough call,” one high-ranking team executive said Saturday. “The economics look pretty close.”

Asked what was a worse precedent — leaving a city that had supported its team over several years, or walking away from a bid that significantly raised the value of a team — the executive would, all things being equal or close to equal, stay with the incumbent city. “Especially,” the executive said, “with strong political support.”

That would be one tentative “yes” vote for Sacramento.

But a high-ranking executive from another team has Seattle in the lead. This exec cites rumblings among some teams about whether the Sacramento group can write a big enough check on time and without complications to make it more viable than Hansen’s group, which has Microsoft CEO Steve Ballmer and his estimated $16 billion at his back.

If you have any further questions about the whole situation, feel free to ask by leaving a comment. We will try to answer your questions as best we can.